Tobacco
Settlement Agreement Fund Oversight Committee

Minutes
of the<MeetNo1>13th Meeting

<MeetMDY1>January 9, 2008

The<MeetNo2>Tobacco Settlement Agreement Fund
Oversight Committee was held on<Day>Wednesday,<MeetMDY2>January 9, 2008, upon adjournment<MeetTime>, in<Room>Room
131 of the Capitol Annex. Representative Mike Denham, Chair,
called the meeting to order, and the secretary called the roll.

Co-chair Denham opened the meeting, but deferred approval of
the December 2007 minutes because a quorum was not present.

The co-chair called on representatives of the Governor's
Office of Agricultural Policy (GOAP) to come before the committee. They
included Mr. Roger Thomas, the newly appointed Executive Director of the GOAP,
and staff members Tim Hughes and Joel Neaveill.

Co-chair Denham welcomed Mr. Thomas to the meeting, as did
Representative Tom McKee, who said Mr. Thomas, a former state representative,
had a broad background in Agricultural Development Fund issues. He mentioned
working with Mr. Thomas on House Bill 611 when they were in the House of
Representatives together in 2000. Co-chair Gibson jokingly urged Mr. Thomas to
bring along $25 million when he next came to the meeting.

In his remarks, Mr. Thomas said he was excited about working
with Governor Beshear, Agricultural Commissioner Farmer, and the General
Assembly. He said he believed all involved could work together to continue to
make improvements in agricultural and rural life in Kentucky. Mr. Thomas said
he hoped to discuss agricultural issues in the future with Co-chairs Gibson and
Denham, and the Tobacco Settlement Agreement Fund Oversight Committte as a
whole. He also indicated his willingness to provide any information that
committee members needed.

Next, Mr. Neaveill and Mr. Hughes proceeded to review the
model and nonmodel projects presented for funding at the December Agricultural
Development Board meeting (ADB).

Referring to the Campbell Farm Wool Art Center project to
establish a wool arts center, Co-chair Gibson asked about the possibility of
funds to assist quilting projects, and further to assist in painting quilt-like
patterns on barns. Mr. Hughes said some hay, straw, and commodity storage model
program funds possibly could be used to upgrade barns. Co-chair Denham said
some funds were available for the barn painting projects through local
agricultural extension offices. Mr. Thomas commented quilt projects could be
considered for funding in the future.

In reviewing the Kentucky Community and Technical College
System Foundation project, Mr. Neaveill noted the original request for
$1,365,000 to continue some computer and welding training for farmers was
reduced to $210,000, for just the computer segment. Mr. Neaveill told Co-chair
Denham, who asked for clarification, that KCTCS would be developing welding
programs on a county-by-county level, rather than proceeding with a statewide
program.

As the review continued, Co-chair Denham referenced a
Montgomery County Cattlemen's Association project offering funding for cattle
improvement and handling, and hay, straw, and commodity storage. The chair said
such projects had met with great success.

During a discussion of a wireless Internet broadband project
that was denied funding, the speakers said a previous program to offer
broadband service through counties had attracted little interest from counties.

Representative McKee asked about the status of funding for
farmers' market projects. According to Mr. Neaveill, the board had discontinued
the competitive farmers' market program, although some remaining funds were
still available. According to Mr. Hughes, they began 2007 with almost $626,000
in the regional farmers' market program; almost $984,000 in the community
market program, and almost $179,000 in the program to fund marketing or
feasibility studies. Mr. Thomas said they would provide additional information
on the farmers' market funding in a subsequent meeting.

Next, the chair called on University of Kentucky professors
Craig Infanger and Richard Maurer to report on the first phase of their
evaluation of the impacts of Agriculture Development Fund non-model
expenditures on various sectors of Kentucky agriculture.

According to Dr. Infanger and Dr. Maurer's report, the
evaluation dealt with 64 large and medium non-model projects funded during
2001-2006. The value of the projects totaled $82.1 million.

The UK professors' report noted that preliminary survey
interviews indicated that "fund recipients have implemented most of the
project goals that were proposed, have been supportive of the funding process,
and have achieved some impacts as a result of their projects. Most of the
impacts reported are consistent with the desired outcomes of the Agricultural
Development Board, although documentation of these impacts is often
lacking."

During the discussion, the speakers said tentative
evaluation results indicated a large majority of funded projects had achieved
their goals, although impacts typically were not well documented. They said the
degree of impact among projects varied widely. Two successful strategies were
noted, support of value-added processing projects, and funding of
"package" assistance that included education, marketing, and research
and development. Also, 93 percent of projects reported they had increased farm
income and 97 percent reported they had helped tobacco-impacted communities.

Responding to committee members' questions, the speakers
said that although there were few projects in Eastern Kentucky, that situation
would probably change when they began assessing the impact at small projects.
They further said one site visit took them to Tennessee because that was where
the company had moved after previously having been located in Kentucky.

Addressing additional questions, the speakers said most
project recipients answered they had met some of their original objectives,
although those goals and objectives had changed as the projects progressed.

Co-chair Denham asked about feedback from project recipients
on the GOAP's follow-up procedures related to the projects. Dr. Infanger said
they planned to offer some suggestions that GOAP staff spend more time in
monitoring and evaluating how recipients had progressed toward achieving their
goals. Responding to Representative Adams, they said recipients were informed
in advance the site visits would occur.

Co-chair Denham asked if they uncovered any information that
was troubling. According to Dr. Infanger, some projects were not performing and
those were the ones that received the lowest rating in a five-point rating
system. Also, there was some concern about how much information was being
reported back to the GOAP as a part of the official reporting process.

Documents distributed during the Committee meeting are
available with meeting materials in the LRC Library. The meeting ended at
approximately 4:15 p.m.